Correlation Between Wintec and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Wintec and Woorim Machinery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wintec and Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wintec Co and Woorim Machinery Co, you can compare the effects of market volatilities on Wintec and Woorim Machinery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wintec with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintec and Woorim Machinery.
Diversification Opportunities for Wintec and Woorim Machinery
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wintec and Woorim is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wintec Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery and Wintec is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wintec Co are associated (or correlated) with Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Wintec i.e., Wintec and Woorim Machinery go up and down completely randomly.
Pair Corralation between Wintec and Woorim Machinery
Assuming the 90 days trading horizon Wintec is expected to generate 1.36 times less return on investment than Woorim Machinery. In addition to that, Wintec is 1.44 times more volatile than Woorim Machinery Co. It trades about 0.05 of its total potential returns per unit of risk. Woorim Machinery Co is currently generating about 0.09 per unit of volatility. If you would invest 516,000 in Woorim Machinery Co on August 28, 2024 and sell it today you would earn a total of 24,000 from holding Woorim Machinery Co or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintec Co vs. Woorim Machinery Co
Performance |
| Timeline |
| Wintec |
| Woorim Machinery |
Wintec and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintec and Woorim Machinery
The main advantage of trading using opposite Wintec and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintec position performs unexpectedly, Woorim Machinery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Wintec vs. Busan Industrial Co | Wintec vs. Busan Ind | Wintec vs. Mirae Asset Daewoo | Wintec vs. Shinhan WTI Futures |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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